The CMO Interview

Stay-at-Home Trend Feathers Samsung Nest

Fewer Families Going Out Means More Sales of HDTV, Sound Systems

By Published on .

Steven Cook came to Samsung Electronics America a little over a year ago, after 13 years at Coca-Cola and another 13 years before that at Procter & Gamble. While fizzy drinks and makeup (he ran marketing for Cover Girl and Max Factor in Europe) may not seem to have much in common with expensive high-tech electronics, Mr. Cook begs to differ.
Steven Cook, senior VP-chief strategic marketing officer, Samsung
Steven Cook, senior VP-chief strategic marketing officer, Samsung

It's not what's inside the bottle -- or compact or black box, for that matter. It's the relationship and emotional connections consumers have with the brand. Mr. Cook said Samsung now sits at No. l or No. 2 in most of its product categories, similar to successful classic consumer-package-goods makers. With the commoditization of electronics -- much like package goods -- his job is to continue to differentiate Samsung as a premium brand.

Ad Age: What is it that you bring from package goods to electronics that the industry needs, and that Samsung needs?

Mr. Cook: Well, consumer centricity is first and foremost. At Procter & Gamble, I worked in personal care; I ran Cover Girl and Noxzema. I also worked in the food business. And of course Coke. And in all of those businesses, although they're very different industries ... it's about the emotional connection and what people are passionate about when using those products or enjoying those beverages.

We're hiring people in many marketing functions with that [CPG] background because Samsung is now at the point where we need to connect with consumers that way. Another reason we're hiring those people is for their marketing discipline.

Ad Age: How does what going on in the economy affect the consumer-electronics business?

Mr. Cook: None of us are naïve, we are certainly aware of the economy, we all have friends and neighbors who are being impacted. Samsung has its own economists, its own economic institute out of Korea, and I was looking at some numbers this morning and saw some very escalated numbers in terms of people cutting back on going to movies, going to restaurants -- so people will be cutting back, no doubt. But the way that we look at electronics, from everything we know -- and a precedent was set during the last recession -- is that people nest. People still have to live lives; they're not going to sit home and twiddle their thumbs. Even in a tough economy, people may not spring for that 61-inch [TV], but they may get a 42-inch HDTV because they're home and they're with their families and they'll spend $5 on a movie rental, vs. $40 for the theater and $80 for dinner.

Ad Age: What do you think about the idea that some tech products have become nondiscretionary spending -- that is, they're not just nice-to-have extras any more?

Mr. Cook: The more utilitarian ones, yes. Take smartphones. If you're running a business or even a student or a mom with kids, you need to stay connected, so that's not optional. We're seeing the change out of people switching phones shortening every year. Now it's about 14 months.

I remember when I first came here, I had a hypothesis that cellphones were essentially fast-moving goods. And the longer I stay, that's indeed what's happened. They're fashion items. It's a statement. One of the reasons people go out and buy a really cool phone is it's one of the first thing people see about you. So I don't think phones are discretionary.

TVs, again, I think if people are going to stay home, you could argue that being able to entertain your family vs. just playing a board game is not discretionary. In fact, if anything, the psychology during a recession is that you need uplifting experiences. So sitting around a Blu-ray watching a movie on a great TV with a great sound system becomes something that is very enjoyable for the family.

Certainly there will be items that people put off. Do you need that new printer? Well, if you have one that's working and does everything you need to do, you might delay that purchase a bit, although my printer product managers will probably kill me for saying that.

Our first-half numbers, and what we have for the third quarter, show we've done well -- very well in the tough economy.

Ad Age: Have you thought about changing your marketing messages to address the economic climate?

Mr. Cook: We still have a halo from the last half-dozen years. Consumers perceive us as a great value, so we don't need to communicate that. Most consumers know that. When they see the design and the technology in action, they're surprised and delighted, and the price point is not an issue for them. Of course, with certain channels of distribution, we're always conscious about the reality of what happens at retail, so we're constantly monitoring that.

Ad Age: With the economy putting pressure on spending in every part of the business, will you cut marketing spending?

Mr. Cook: There are two schools of thought out there. In February, before it was as ugly as it is now, we wrote a white paper that asked that very question. ... Our recommendation, based on history and personal experience, was: Do not cut spending. If you're a tier-one brand, which we are, and you have a good story to tell, it's not about cutting spending, it's about looking for great returns on spending -- better ROI.

Ad Age: The NFL has been a marketing partner of Samsung's for three years now. In these tough economic times, do you tend to focus even more resources on that core sports customer, getting them to buy more? Or do you work on broadening marketing beyond sports?

Mr. Cook: In terms of broadening the audience, one of the very smart things that I inherited coming here is the push to start with very strategic rollouts, first starting with the Best Buys of the world, focusing on big box. And now we're working our way along creating strong relationships not only with the big-box retailers but also the regional electronics companies and working with our distributors, the mom-and-pop electronics stores out there. So that's one way to go broad -- with distribution and building relationships and presence and activation at retail.

The other thing we're doing is ... about six months ago we completed a global, comprehensive piece of research to get a stronger laserlike focus on who our consumer target is. And we're calling that target today, the Young-Minded Consumer. That's a mind-set, not a demographic. We know who they are by age, by sex, by country, by region, by product. So we're doing the micro-segmenting right now. ...

We're making some very strong -- I'll call it educated -- bets, based on that high-level research. We've identified the five passions that our young-minded consumers are most passionate about for electronics, and those are sports, thus the NFL, but we're looking at other sports; music, where our phone division has a lot of music sponsorship and integrated marketing programs; gaming -- Samsung is the lead sponsor for the World Cyber Games ... fashion and design -- you may be aware of what we did with Valentino during Fashion Week. And the fifth passion is social responsibility. Our consumers, believe it or not, index higher on social responsibility, with a particular bent on green and the environment and sustainability.

Ad Age: Green is difficult for tech companies. How do you walk that fine line of saying you're green, but meanwhile you've got a product that is full of toxic metals?

Mr. Cook: Coming from Coca-Cola gave me a big education in why it's important to have high social responsibility. ... Samsung started what was called its green management in 1996. We were doing country before country was cool.

Ad Age: And you started marketing it then?

Mr. Cook: No, no. Samsung by nature is a very humble company. As big as we are -- $130 billion for electronics globally -- that's not what we do. I went back, and I have not been able to find any press releases, and even internally people were surprised that we were doing what we were doing because it was never really communicated to employees. ... We've been doing it so long it's been baked into the product, it's been baked into our manufacturing process.

Ad Age: But isn't that flying a little too low on a valuable brand attribute?

Mr. Cook: We've been quiet, [but] in the world of green, one of the key lessons is it's not image marketing. ... You need to be humble and clear and then deliver or overdeliver. We intentionally held back our U.S. communication on green until we were ready. We basically came out of the green closet, if you will, on Sept. 3. That was when we announced what we're doing, and we're three days from launching a 50-state take-back and recycling program.

Ad Age: So how are you going to communicate that green message?

Mr. Cook: First online. We'll also be doing some at point of sale, and we're working on that right now. You're also going to see in the late fourth quarter some green messages in print from us.

I was one of the three speakers at the [recent] opening ceremonies of the World Cyber Games, [and] I spent five minutes of my opening remarks talking about green. And I handed out free mail-back envelopes for cellphones that people don't want anymore ... saying, "If you have a cellphone at home you don't want, don't throw it away. And get it out of the bottom drawer, because I know it's there." I personally had eight that I discovered a week ago.

Ad Age: What is your favorite electronics gadget?

Mr. Cook: I wouldn't say I'm a geek, but I'm pretty much an early adopter. I have a digital SLR that I paid five times what it costs today, and I could shoot myself sometimes, but I love it. When I get the Sunday paper, the first thing I get out is the Best Buy and Circuit City and other circulars and check out all the electronics -- and I've trained my 13-year-old son to do the same -- just to see what's hot and what's out there. And to be first in line.

The day the Wii came out, my son and I got up at 5 a.m. and went to the Circuit City in Atlanta and found out they were on allocation with only 50 Wii systems in Atlanta. We sat on a bench, and I told Jake we might not get one. Then the guy sitting next to me says, "Were you here to buy a Wii? I've got two vouchers." I said, "Yes, how much do you want for it?" He said, "Spot me a $20, and it's yours." I got that $20 out faster than you can imagine. ... I get goosebumps thinking about it.

Ad Age: What's your favorite video game?

Mr. Cook: "Wii Tennis." And "Guitar Hero." I play it, but my son creams me. We premiered "Guitar Hero World Tour" at the World Cyber Games, and it is un-be-lievable!

Ad Age: Will Samsung continue with its gaming sponsorships and co-marketing deals?

Mr. Cook: The thing about gaming is it's so immersive. After I did my duties at the World Cyber Games, I just walked around and watched people. I love observational research -- there's just no replacement for it. Games are getting so sophisticated, and the team play is so great. And in the end, people are sitting in front of the Samsung brand for a couple of hours having fun, playing and just interacting.

Ad Age: Last question: Coke or Pepsi?

Mr. Cook: (Laughs) Coke. I was there for 13 years and, in fact, I'm trying to figure out how to work with Coca-Cola here at Samsung. I'm still loyal to Coke. I still have Coke stock, and I still drink Coke. When I told them I was leaving, I told them, "I'm resigning the red team to go to the blue team," and they said, "You're going to Pepsi?" and I said, "Gotcha." I said, "I'm going to the other blue team, Samsung." Because of where the Samsung brand is now, I had plenty of people say, "Hey, keep an eye out for me in the future."
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